Natural Gas Price Prediction – Prices Surge on Cold Weather Ahead of Inventory Report

Natural gas prices continue to rise on Wednesday ahead of the Department of Energy’s inventory report. Expectations for Thursday’s report average 75 BCF with a high of 95 BCF and a low of 25 BCF according to estimize.  Net injections last week were well less than expected which was the catalyst for the rise in prices.  The weather is expected to be colder than normal throughout most of the mid-west according to NOAA.  There are no tropical disturbances in the Atlantic or Caribbean that could generate issue for energy infrastructure.

Technical Analysis

Natural gas prices continued to surge higher climbing 2.5% and closing at 3.25 the highest level since January of 2018.  Prices are targeting resistance near the January highs at 3.60.  Support is seen near the 10-day moving average at 3.07. Momentum is positive as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory which points to higher prices. Prices are overbought. The fast stochastic is printing  a reading of 97, well above the overbought trigger level of 80 which could foreshadow a correction.

Net injection levels are lower than the five-year average. Net injections into storage totaled 46 Bcf for the week ending September 21, compared with the five-year (2013–17) average net injections of 81 Bcf and last year’s net injections of 64 Bcf during the same week. Working gas stocks totaled 2,768 Bcf, which is 621 Bcf lower than the five-year average and 690 Bcf lower than last year at this time.

Stocks are Low

The EIA reported last week that working gas stocks’ deficit to the five-year range increases. The average rate of net injections into storage is 16% lower than the five-year average so far in the 2018 refill season, which covers April through October. If the rate of injections into working gas matched the five-year average of 10.7 Bcf per day for the remainder of the refill season, total inventories would be 3,194 Bcf on October 31, which is 621 Bcf lower than the five-year average of 3,815 Bcf.